Property Rights 101: The Foundation Of Capitalism Explained

October 25, 2012

The foundation of capitalism is property. Every non-capitalist system requires violating property rights. Socialism steals almost all property, the nanny-state bans some property and regulates others, the welfare system steals and gives away property, and cronyism both steals and regulates property in a way that makes the corrupt rich; all violations of capitalism requires violating property in some way.

This is why it’s fundamental for capitalists to understand why we believe in a system of property rights, why we should defend property, and what property rights do entail. The fundamental debate about capitalism is a debate about property. We can’t lose sight of how important this debate is. As property rights go, so goes capitalism.

Property rights are interesting concepts, because they’re based on the fact that it’s impossible to get everything we want out of life unless we establish a kind of rationing system. Otherwise, we experience the “tragedy of the commons”, and every resource is depleted and every action begins to have little to do with what’s best for the long-term. In the short-term, people starve, and civilization becomes literally impossible. But let’s back up and start from the beginning.

You Can’t Always Get What You Want

“…like the philosopher Jagger once said, ‘You can’t always get what you want.'”
-House MD

At some point in history, two cavemen realized they both wanted the same rock. So they fought over it to the bloody death. At a later point in history, two cavemen realized they both wanted the same deer. So they fought over it to the bloody death. At a later point in history, two cavemen realized they needed a system for deciding who could “own” what without someone having to die. Thus, the idea of property rights was invented.

There’s more to it, of course. There are moral, economic, rationing, and even philosophically axiomatic reasons for believing in property rights. It’s an important discussion, and at the root of the discussion is the answer to anarchy, libertarianism, conservatism, Objectivism, and every other kind of political-ism. If we understand what property is and why we have it, we begin to understand why a social system of capitalism isn’t just good for us — it’s necessary for survival itself.

Definition of Property: What Are Property Rights?

Property rights are when someone has the authority over something. They have the authority to buy, sell, trade, give away, destroy, fix, etc — they have the authority over something.

If a house is your property, you can live in it, sell it, rent it, burn it, fix it, paint it, ignore it, or do anything else you’d like to it. If you own enough land you can even build a new structure entirely.

If you own your body you can sell it (that’s what a job is, and there’s nothing inherently wrong at all with selling time/labor for money), tattoo it, wear makeup, eat brownies, drink beer, etc. Regardless of what happens to you in life, you own your own body and can do what you want — within the confines of the property rights of others.

Why Property Rights Exist

Property rights are vital for the prosperity and opportunity of society. They’re also moral and are directly derived from the principles of justice. Let’s look at the 6 basic arguments for property. There are more, of course, but these are the most common that mix together nicely:

1. The Rationing Case

The tragedy of the commons is one of the most important economic, or “pragmatic”, reasons to accept a system of property rights. The argument is simple: if we don’t divvy up “stuff” on the basis of ownership, then everyone will destroy the “stuff”.

An example of this would be, much to the annoyance of many environmentalists, the lumber industry. Unless we divide up forests according to property rights, then no lumberjack would have any incentive to replant trees and re-harvest them there later. That’s too much work. He’d instead want to move on and cut down trees somewhere else.

If he replanted the trees but didn’t have the exclusive control over them for his own harvesting and profits, then another lumberjack could move in and cut them down without ever having to work to plant trees. This is the “tragedy of the commons”, and is a problem in a world without property rights. People begin consuming without a desire to produce or invest, because they don’t get to reap what they’ve sown.

In a sense, it could be understood that a property-rights system is a response to the tragedy of the commons. If we believe in private property, it’s because we’re rejecting non-ownership and we’re rejecting common ownership. This is why I can claim a spot of land and stop other people from entering it — they can’t own what I own without my permission. It’s my land. It’s my property.

This is an important distinction, because property rights don’t mean that violence is somehow never morally accepted — it means that there is a time and a place for when violence is accepted, and that context is always in relation to a property owner defending what is rightfully his/hers.

Property rights, in a sense, aren’t just about “stuff”. They’re about when we have the right to use violence.

2. The Economic Case

The economic case for property rights is a kind of derivative of the rationing case. If people own their own stuff, they are more likely to take care of it. But they are also more likely to invest because they’ll want to see the results of their investment.

This idea of being able to reap what is sown is critical to capitalism — in fact, the root word of capitalism is “capital”, and “capital” what happens after we work, produce, and have some left over for savings.

This profit-seeking mentality makes everyone wealthier, so long as it’s facilitated with trade. Without the ability to profit through property rights, people won’t work. If a farmer knows that a crop will be stolen completely by the local mayor, he won’t focus on growing crops. Everyone loses without property rights, except a handful of hunter-gatherers.

This is why it must be understood that property rights are the foundation of civilization. Property must exist in some form for civilization to exist. The only question is in what form they exist. We’re capitalists, and that means we believe private property is easily the best theory and framework possible.

3. The Philosophical Case

The moral case for property rights is simple: man must survive, and the only system which accepts the notion of survival and of civilization is a system of property rights. No other moral system makes sense. The others are contradictory. Socialism is fundamentally irrational. Private property, is, therefore, the logical result of accepting that man should survive and prosper.

As Ayn Rand famously wrote:

“Man has to work and produce in order to support his life. He has to support his life by his own effort and by the guidance of his own mind. If he cannot dispose of the product of his effort, he cannot dispose of his effort; if he cannot dispose of his effort, he cannot dispose of his life. Without property rights, no other rights can be practiced.”

4. The Religious Case

Every major religion establishes a concept of property rights. In Christianity, one of the Ten Commandments is, “Thou shalt not steal.” Christ and the Apostle Paul both tell their people that charity must be given freely and voluntarily — not through violence or theft.

In the Old Testament, the Bible is clear about keeping ancient boundaries in tact. In other words, property rights don’t depend on a particular generation or a particular context to be “good”. They transcend culture and time and person — they exist whether we violate them or respect them. Property rights are a fundamental moral principle for civilization.

In Exodus 22, the Bible makes it clear that killing a thief at night was justified, but that one should just detain them if it was during the day:

“If a thief is caught breaking in at night and is struck a fatal blow, the defender is not guilty of bloodshed; but if it happens after sunrise, the defender is guilty of bloodshed.”

5. The Axiomatic Case

Everyone believes in a type of property. Talk to a Marxist about how you need to take their coat because you need one, and you’ll soon see that “common property” arguments are essentially just complete lies people tell themselves so they can take swings at the only economic system that makes sense.

The same goes with aggression in general. People presuppose that we should deal with one another with reason — and logical consistency leads to respecting this as a universal, natural law system. It’s impossible for someone to not believe that they have control over at least themselves on some level. The only question is the extent of the property rights.

5. The Consistent Case

If I don’t own my body, then I know you don’t either. That is, in a nutshell, the axiomatic “case” for property rights. Whenever someone talks about taking your property, remember that they aren’t getting rid of property — they just want to transfer ownership.

Someone has to control something. This is why socialism collapses — it takes from the rightful owners who produced and earned the property, and gives it to someone else. This violates the moral and economic principles found in natural order, and is a type of rebellion against reality itself. And I can promise you, that’s one rebellion the leftists have never won.

6. The Natural Order/Law Case.

The best philosophy is one which accepts reality and reacts to it in a way to achieve one’s basic, fundamental goals. The most basic goals of all are, generally: survival, prosperity, and offspring. Capitalism, the system of protecting property rights, is easily the best system for this.

It rewards the best in society, punishes the worst, and stops men from violating the rights of others. If someone wants to find happiness, their chances are best under capitalism. If they want to be rich or poor, both are made available.

The universe is harmonious. It sometimes seems almost fine tuned for the prosperity of humanity, if only we would just analyze it and follow through with reason. Economics, natural order, and natural law all work together perfectly in capitalism, and reward the most productive, punish the lazy, and provide for those who can’t earn on their own.

Whether you believe in a God who fined-tuned everything or that man evolved to mix perfectly with all of nature, it should be clear that the rights of man and the principles of economics work perfectly together, and protecting one leads automatically to maximizing the other.

It’s bad economics to violate natural law, which include property rights. It’s immoral to ignore the principles of economics. Life works out. If there’s one thing that has not been emphasized enough, it’s how all the branches of human thought point to private property, natural rights, and the liberty of humanity.

If you want to learn more about the basic principles of property and liberty, check out our article on what capitalism really means, and what libertarianism is all about.

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